1. Technical Field
The present invention is related to consumer credit. More particularly the present invention is a system and method for identifying which potential customers are teaser surfers and point chruners for card issuers.
2. Description of Related Art
Strong competition in the credit card industry has driven banks and credit card issuers to compete for profitable customers. Many of the credit card issuers have used “teaser” rates as a vehicle to lure customers away from a competitor or attract new customers. Low teaser rates such as 3.9%, 2.9% even 0% for a given time period such as three, six, or twelve months for both charges and balance transfers have been widely used by credit card issuers. The hope is that those customers who transfer their balances from a rival credit card issuer or charge on their new cards will stay after teaser rates expire. In 1997, more than 60% of all Visa (a registered trademark of Visa PO Box 8999 San Francisco, Calif. 94128-8999) and MasterCard (a registered trademark of MasterCard International 2000 Purchase Street Purchase, N.Y. 10577 U.S.A.) offers were with low interest teaser rates and 18% of households in U.S. transferred balances.
Other than using teaser rates, some credit card issuers entice potential customers by issuing rewards. Generally the rewards are in the form of points which accrue as the credit card is used or balances are transferred. Popular rewards are in the form of frequent flyer miles and free hotel points. These rewards may be combined with low interest rates for initial balance transfers and charges within teaser period.
As a result of this competition process, teaser surfers and point churners were born. Teaser surfers are those customers who transfer their balances from one card to another to take advantages of low introductory interest rates. Point churners are those customers who transfer their balance from card to card to accumulate points for frequent flyer miles, free hotel points, or other benefits. In turn, this lead to great losses for credit card issuers on teaser surfers and point churners because of free points and low interest rates (not enough to cover funding costs), acquisition costs, and operation costs. Being able to identify those teaser surfers and point churners could save a huge amount of losses for credit card issuers.
It would be advantageous to provide credit card issuers with the means to help credit card issuers to filter out those teaser surfers from credit card solicitation process, which in turn will reduce costs of card solicitation process and avoid potential losses.